BRADENTON, Fla. — Kentucky Auditor Adam Edelen wants legislators to restructure the board that oversees the Cincinnati/Northern Kentucky International Airport after uncovering what he said is "decades of waste and abuse."
Edelen launched a special examination after local media reports raised concerns about travel, spending, and board governance. The airport's financial statements and annual audits were not included in the review.
On Aug. 19, he released a
"For far too long, CVG has served as a political appendage of the Kenton County judge/executive," Edelen said. "One individual literally controls an airport that serves a metropolitan area of 2.1 million people and is critical to the economic vitality of the region and two states."
Oversight of the airport belongs to the Kenton County, Ky., Airport Board, but all seven members are appointed by the Kenton County judge/executive. Edelen said the structure has created confusion among board members "and increases the risk of political influence affecting board member decisions."
Some of the auditor's other findings included questionable contracting and withholding reports from public review, no formal written contract with the board attorneys since 1962, high costs for attending industry conferences, reimbursements in violation of board policy, excessive costs for board meals, and nepotism.
The auditor said his report's "most significant recommendation" is for Kentucky's governor and Legislature to revise statutes to restructure the airport board and expand its membership to 11 to ensure that at least three board members are from Ohio.
Edelen said that reforms he proposed are designed to "bring much-needed accountability and representation" that reflects all the airport's stakeholders.
"CVG is routinely ranked as one of the most expensive airports in the country and has lost 500 daily flights and some 17 million passengers since 2005," said Edelen. "Although some strides have been made in the past year to add flights, the board's dysfunction cannot be permitted to hinder the airport's ability to attract new carriers and flights, which helps grow the economy of the region."
In March, the airport board redeemed about $19.9 million of 2002A, 2003C and 2007A bonds using funds in the reserve account.
About $62.2 million of fixed-rate debt remains outstanding, and there are no current plans to issue more bonds, according to the 2013 audit.
In May, Standard & Poor's revised its outlook on CVG's debt to stable from negative while affirming its A-minus rating. S&P said the outlook revision reflected the stabilization of local demand coupled with proactive management measures, such as paying down a portion of the debt.
S&P said its rating also recognizes declining enplanement trends, a weak competitive position given a high airline cost structure and competition from nearby airports, and high exposure to Delta Air Lines Inc., which accounts for 74% of enplanements.
The airport's bonds also are rated A-minus and A3 by Fitch Ratings and Moody's Investors Service — both with stable outlooks.
